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My understanding is he would still have to pay back the loan eventually. But the 2 bitcoin show the lender he is responsible with his money and can/will pay back the loan. If he doesn't they get to keep it.

With a deflationary currency he might not even have to pay interest. 🤔 Everyone could still win, the lender gets back their initial investment, now worth more purchasing power. The borrower gets to make the investment on their own time table.

Leathermint 2mo ago 💬 1

Why would I lend a bitcoin if I get nothing in return? Why would I even bother? I'll just keep it in my custody and wait. There HAS to be an incentive for someone to lend even if the risk is at the minimum.

But why would the person even borrow in the first place if he already has the money? If I borrow 1 coin I still have to earn it back. So why would I not just spend it and earn in back. There's a lot less hassle that way. I won't have to deal with lenders.

I don't see the incentive in any side to participate in this.

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Discussion

Pyrohawk 2mo ago

Good point, so there probably would still be some interest to make it worth while for lenders, who have the excess.

On the borrower side, I think borrowers would be more selective in their borrowing.

So in this scenario, maybe he thinks the house will pay itself off, and generate revenue, or locate him where he can generate more revenue. However... unless he can get multiple loans from that same stack, or still use it, I can't think of a good reason he wouldn't just pay if he already has the money. Besides what you mentioned, the illusion of still having 2 bitcoin. Or maybe onchain fees are so high it makes sense to get the loan in lightning (or whatever) that's a more liquid assets short term?